What tomorrow’s Budget should do to tackle poverty

17th March 2015

Julia Unwin, chief executive of the Joseph Rowntree Foundation, shares her views on how tomorrow’s Budget should tackle poverty …

The UK cannot achieve its full economic potential while levels of poverty and disadvantage remain high. Many people are still struggling and poorer places have been hardest hit by cuts to services. JRF would like to see a Budget focused on supporting those in lower income households, meaning that everyone can share in and contribute to economic growth. We hope to see serious plans to cut in-work poverty and for tackling the housing crisis which would reduce the cost to the taxpayer while improving people’s living standards.

A full plan and timescale for tackling in-work poverty in all public procurement would boost the incomes of low-paid public sector workers, and could act as a blueprint for businesses. Changes to the remit of the Low Pay Commission to allow it to raise the minimum wage faster to help people to keep up with the rising cost of essentials, and devolution of the skills budget to city regions would make sure that people’s skills match up better with the demands of the labour market.

Raising the income tax threshold further is poorly targeted on the lowest earners. To tackle working poverty, the estimated £2.7 billion needed to raise the threshold to £11,000 would be better spent on raising in-work benefits and helping with the costs associated with working, like childcare.

Introducing a second earner disregard within Universal Credit would incentivise work by allowing another worker in every family to keep more of the money they earn before in-work benefits are withdrawn. A greater proportion of the overall money set aside to support childcare costs should be targeted towards lower income families, helping to make work pay.

A chronic shortage of genuinely affordable homes has caused the Housing Benefit bill to rocket. Switching subsidies to increase the supply of homes that are affordable for people on lower incomes would bring the Housing Benefit bill back under control.

Extending the timetable for reductions to local government spending would give councils breathing space to implement further reform, increase partnership working and do preventative work, allowing them to deliver services more cheaply in the medium term while protecting vulnerable residents from the impact of the cuts.